'I am like any central banker'

LUNCH WITH BS/Kishori J Udeshi

Kishori J Udeshi

June 10 last year was like any other day for Kishori Jayendra Udeshi, then an executive director of the Reserve Bank of India (RBI). When the governor's office called, she diligently took the lift up one floor armed with notebook and pen, anticipating a discussion on some policy issue or the other.

As she walked in Bimal Jalan greeted her with the words, "Congratulations, you have become a deputy governor." Udeshi could not believe her ears. She started crying.

Udeshi tells the story without embarrassment, but she demurs at being labelled the RBI's first woman deputy governor (DG). "Don't focus on the gender, I am like any other central banker," she says.

The disarming frankness, though, must be unique. Of her first name, she says coyly, "In Bengali kishori means a teen-aged girl. I am 60!" Of the cotton saree she is wearing, a Bengal speciality, she feels constrained to explain, "Calcutta cotton is my favourite. But you know" "" she breaks into Hindi "" "kabhi kabhi silk sari bhi pahenna padta hai. Log kahtein hai, aap deputy governor hain, silk sari pahenna chahiye." (One should wear silk sarees also sometimes. People say, you are deputy governor, you should wear silk sari.)

We are lunching on the 25th floor of the Reserve Bank headquarters on Mint Road. Though Lunch with BS is usually hosted by Business Standard, I had little choice but to agree to the reverse this time.

Ever since the third deputy governor, Vepa Kamesam, retired last year, two DGs "" Udeshi and Rakesh Mohan "" have been running the show with huge portfolios. Udeshi handles regulation, supervision, non-banking finance companies, urban cooperative bank, currency management, exchange control, internal inspection, audit and security. The list can go on.

All of this leaves her little time to visit a restaurant of her choice, in the tradition of Lunch with BS. "I would rather save on the travel time and spend half an hour extra on our lunch," she had suggested.

All the same, she is very much the hostess. Every item on the menu was selected by her personally. She had instructed Brian Paes, the central bank's catering supervisor, to cook crab and prawn. As the delicious stuffed crabs and Goan prawn curry arrive with rice and salad, I quiz her about her background.

It turns out that deputy governor-ship is not the only first for her. She was the first person in her family to go out and work. Her father was an exporter who used to import raw cashew from Africa, process it at Quilon and then export to Russia.

She studied at two well-known schools in Mumbai "" Villa Teresa and Alexandria Girls English Institution "" and took an MA in Economics from St Xavier's College where she was the first woman student to get the trophy for all-round performance (academics as well as sports). She was also Junior National Badminton Champion and played in the Indian All Star Women's Basketball Team.

Udeshi was a direct recruit officer in 1965. Why did she choose to join RBI, I ask her. "In those days, during Republic Day the old RBI building used to be lit up. The main building was very impressive with its gothic pillars. That picture was always there in my sub-consciousness, so I wanted to work here," she says.

To change tack, I ask her to do a SWOT analysis of herself. "I think my strength is my commitment to work. Whatever I do, I always try to do my best. I prepare myself well for every meeting. I look at every issue as if it's a puzzle and ask myself, can't it be solved this way? I enjoy my work," she says. Then she suddenly lowers her voice and breaks into Hindi: "Nazar na lag jai. Kaam mein bahut maza hai" (I hope nothing spoils the enjoyment of my work).

What's her weakness, I ask, trying to keep a straight face. "Perhaps, I need more confidence in myself."

More prawn and crab are heaped on our plates. "When it comes to fish, I am like a cat," Udeshi says, and asks for some fried potato which is another favourite. Stuffed bay karela (bitter gourd) and some vegetables with herbs make up the rest of the menu.

As we tuck in, I ask her what she considers her toughest assignment at the RBI. "Nothing I can remember, I am a small cog in the wheel," is her frank admission. Pressed, she remembers being part of the team that introduced the Foreign Exchange Regulation Act (Fera) "" and also being in the team that dismantled and replaced it with the Foreign Exchange Management Act (Fema).

Having spent almost four decades in the bank, I ask her what changes she had seen. "Over the years, we have been able to bring in much more speed, transparency and teamwork in our decision-making process. Both Dr Jalan and Dr [Y V]Reddy have ingrained the philosophy of working for the good of the common man in our minds and our efforts are constantly in that direction," she says.

How did she rate the Indian banking sector? With a touch of pride, she says, "We are among the best in east Asia and set for a very good run."

I decide to argue a bit: isn't the bull run driven by primarily treasury income? With interest rates bottoming out, won't banks be in trouble now? She disagrees: "Banks are quite sensitive and have already seen scope for consumer and retail lending to sustain their income. There is a lot of unaccessed market. There will be growth in credit pick-up consistent with economic growth. The infrastructure sector is set to take off. With the passage of the Electricity Bill, power projects are sure to come up. Nothing is static. There is so much of dynamism in today's banking."

So what about the concerns? "The concerns arise from the need to graduate to Basel II because banks are still not that savvy with risk management. Besides, derivatives like futures and options have not been understood properly," she says. But isn't the cooperative banking sector a major problem area? For the first time, Udeshi refuses to comment.

She does, however, have a clear view of the government's role in the banking sector. "The government should give greater autonomy to banks in personnel matters. They should be able to attract talent. You can't have the same yardstick for both big and small banks. For instance, smaller banks can manage with one executive director but big banks need two. They should be allowed to go for direct recruitment. Good performing banks should get incentives," she says.

I decide to argue again. Shouldn't the government stop meddling with the banks? What's the point of keeping the public sector character of banks? She poses a counter-question: "What's wrong with the public sector character? The greatest strength for the banks is the sovereign backing. Ultimately, it's not the government but the individuals heading the banks who are responsible."

The sumptuous main course is replaced with dessert of fresh fruit, fig ice cream and kesar rasmalai. I ask her whether we need so many banks. Her answer is an emphatic "yes". This is because more players infuse competition. "At the same time, we may see mergers and acquisitions. We see the need for consolidation," she says.

Will foreign banks gobble up Indian entities? "I don't look at it this way. The foreign banks' entry will also incentivise local banks to reach for global standards," she says refusing to be drawn into a controversy.

The fig ice cream is outstanding. So is the jasmine tea. I ask her the last question: Why don't banks lend to small and medium companies? This time, she comes out strongly saying, "Banks must lend to agriculture but not as directed lending. They should realise that it's a commercial proposition and that farmers can be better borrowers than some corporations as the poor and middle class also have good moral values. Loan waivers may have spoilt that culture. Now we see this section subsidising triple-A rated corporates. This cannot continue. We will find some way out "" I don't know how and when "" but we will."

Paes, who heads a team of eight cooks organising a buffet lunch for 400 RBI officers every day, has served many a dignitary at the central bank. As we leave I ask him who has been his most important guest at the central bank. Without batting an eye-lid, he replies, "Madam Udeshi. She is the most graceful guest I ever had." Perhaps he was being diplomatic, but I could not have agreed more.